Innovator's Interview of Humana's Tony Tomazic


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Here is an innovation interview with Tony Tomazic of Humana (Director of Consumer Innovations) about innovation and insights at Humana.

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Innovator's Interview of Humana's Tony Tomazic

  1. 1. Tony Tomazic Director of Consumer Innovations Humanatheinnovator’sinterviewThe Innovator’s Interview highlights unique innovations from a wide range of industries, and is anopportunity for futurethink and some of today’s leading innovations to share insights and ideas. April 2010 Anticipate. Innovate. Activate. | Future Think LLC © 2005–10 Reproduction prohibited | New York NY
  2. 2. the innovator’s interview 2Tony Tomazicthe backgroundThis Innovator Interview series highlights leading innovators at Fortune500 companies. In contrast to past interviews, focusing on a singleinnovation, this series examines the state of innovation at globalorganizations. We spoke with both innovation leaders and practitioners,within varying business units and organizational structures, across abroad range of industries both for–profit and not–for–profit.The interviews offer a unique insider’s view into the world ofinnovation—what makes it work, what holds organizations back,and what critical advice new innovators need to know to be moresuccessful with innovation overall.the interviewfuturethink had the pleasure of speaking with Tony Tomazic, Directorof Consumer Innovations for Humana Inc., one of the nation’s largestpublicly traded health and supplemental benefits companies. In hisleadership role in the Humana Innovation Center, Mr. Tomazic focuseson developing and implementing programs to engage consumers intheir health and promote well-being.Why does this insurance company want to make you healthier andhappier? And how are they building their business by encouragingpoliticians to ride bikes and schoolchildren to play games? Read onfor Mr. Tomazic’s insights on building a successful innovation programand finding opportunities in adjacent and open innovation.What is the role of the Humana Innovation Center?Our responsibilities are to deliver solutions around designated areasof focus that will help to propel Humana into new spaces, newadjacencies, and new advantages in our core business.My job is to lead consumers towards healthier lifestyles by engaging themin their health – by connecting people with their personal motivations,interests, and causes, in order to encourage healthier behavior.I also believe that personal health is closely aligned with environmentalhealth. Sustainability, health, and the convergence of those two spacesare areas that I’m focused on right now.What kind of innovation opportunities do you see in combiningsustainability and health?We see the bike as a real icon of the convergence of personal andenvironmental health. Our Freewheelin bicycle sharing program, whichwe introduced in 2007, was inspired by models in Paris and elsewherein Europe.We started by creating a bike sharing initiative for our own employees inLouisville, Kentucky. Each employee got a card with a magnetic stripe. Anticipate. Innovate. Activate.They’d swipe the card at a bike kiosk and the kiosk would communicatevia cellular technology back to the server, validate their membership | Future Think LLC © 2005–10 Reproduction prohibited | New York NY
  3. 3. the innovator’s interview 3Tony Tomazicand open the magnetic bike lock. Employees could take a bike out andreturn it to any one of three kiosks in downtown Louisville.We found that our employee population really enjoyed the program. “If we want to substantiallyAbout 20 percent of them indicated that the bike program was their modify the core business andsole form of exercise. revolutionize our industry,We shared our results with the Denver mayor. He was impressed andtold us, “You should introduce something like that for my city, which is the right way to do thatincredibly bike friendly. And you should come out here for a party I’mhaving this summer called the Democratic National Convention.” is by approaching it fromWe ended up bringing a thousand bikes to the 2008 Democratic a very business-oriented,National Convention in Denver – and a thousand bikes to the 2008Republican National Convention in Minneapolis-Saint Paul, Minnesota. disciplined standpoint.”We didn’t charge for the use of the bikes, but we issued Freewheelin IDcards after collecting driver’s license and credit card information just tomake sure that people brought the bikes back at the end of the day.We had an incredible turnout and nearly 42,000 miles were put on thebikes across eight days. Interestingly, we were able to determine that itwas primarily local residents who were using the bikes to avoid traffic.As a result, we were able to establish a business case for bike sharingby demonstrating that there was a real market for bike-sharing in bothof these large communities.That business case allowed us to launch a standalone business out ofHumana called B-cycle, which has a separate P&L, and in which wehave a controlling interest. Its purpose is to sell bike sharing systems tocommunities and to campuses nationwide. Their flagship installation istaking place in Denver in spring 2010.Very interesting. So, what are the main criteria you use whenchoosing new ideas to move forward with?Our process includes vetting ideas both from an ROI standpoint andfrom a value standpoint. The word “value” is highly subjective, ofcourse, and we have been very liberal with the interpretation of valueversus ROI in years past. We have considered that the benefits ofbuilding brand and increasing consumer awareness and preferencewere as important as the potential for profit. That approach certainlyopened doors for us. B-cycle is an example – that’s a profitablebusiness for bike sharing that wouldn’t have been developed otherwise.However, at this point in our maturity, we are taking a much harder lookat the potential for revenue as one of the main drivers. If we want tosubstantially modify the core business and revolutionize our industry,the right way to do that is by approaching it from a very business-oriented, disciplined standpoint.Has your approach to innovation evolved in other ways over the years?Absolutely. Our Innovation Center has changed its role to meet theneeds of the organization. Ten years ago, we were thinking aboutwhat we could do besides deliver insurance solutions. The innovationquestion was: What can an insurance company do to benefit thebottom line besides delivering its core products? Anticipate. Innovate. Activate. | Future Think LLC © 2005–10 Reproduction prohibited | New York NY
  4. 4. the innovator’s interview 4Tony TomazicWhat came out of the Innovation Center at that time were clinicalprograms that helped patients with disease management. For example,we launched our popular personal nurse initiative, in which specially- “Any innovative companytrained nurses provide guidance to members dealing with seriousconditions like diabetes and high blood pressure. Very rapidly, these must develop processes forprograms became so essential to our profitability, and so important to understanding and respondingour customer base that they were brought into the operational arm ofthe business. to consumer needs in a very Later, the Innovation Center moved on to focus on the consumer focused way. Otherwise, communications aspect of the business. We set out to make those cryptic and confusing “explanation of benefits” communications they’re just inventors, they’re from your health insurer more consumer-friendly and useful. We took the model of a 401(k) statement and created what we called not necessarily innovators.” the “Smart Summary” statement. It included everything from your spending, to your deductibles, to your discounts. It had photos of the prescriptions that you received; what the actual pills looked like- and recommendations for in-network versus out-of-network, and suggestions for generic versus branded medications. We even put in coupons so people could save money on health-related products that we thought they’d be buying.The Smart Summary statement was very successful, and it wound upbeing so big that it needed to become part of the operational business.And so, it moved out and we regrouped our Innovation Center again.So today, we’re taking a look at what’s next. What can we do to steerthe company toward delivery of lifelong well-being? What does thatmean in the eyes of the consumer, and what permission do we have tooperate in that space?And how do you go about understanding that consumer perspective?Any innovative company must develop processes for understandingand responding to consumer needs in a very focused way. Otherwise,they’re just inventors, they’re not necessarily innovators.We’ve kept the consumer very close. Our goal is to meet bothexpressed and unexpressed needs. People don’t really enjoy thinkingabout healthcare or insurance. And honestly, most people don’tnecessarily think about their health until problems arise.However, we discovered that you can find ways to motivate people toget healthier, by building new habits around the things that they alreadylike to do. This approach was inspired by an eye-opening piece ofresearch where we found that people with chronic disease conditionsconsider themselves to be healthier simply when they get to do thethings that they enjoy. Even if you’re diagnosed with a chronic condition,if you’re able to play golf on Sundays, or play bridge with your bookclub, or play on the floor with your grandchildren, you consider yourselfto be healthier. And that’s a very, very powerful motivator.You’ve mentioned that seeking new adjacencies is key to Humana’sinnovation strategy. How do you approach this?We know our core business space and we’ve sketched boundaries Anticipate. Innovate. Activate.around it to identify adjacent opportunities linked to consumer needs. | Future Think LLC © 2005–10 Reproduction prohibitedThose adjacencies drive potential solutions and they open the door to | New York NY www.getfuturethink.compotential partner relationships - that’s where we’re operating.
  5. 5. the innovator’s interview 5Tony TomazicWe have an interest right now in driving behavioral change inindividuals by positively influencing their lifestyle choices. This is notour core business, but a healthier population obviously benefits our “We’ve seen the greatestcore business, it benefits our customers, and benefits the insuranceindustry as a whole. results from engaging peopleWe’re championing a direction for Humana as a health company rather in doing the things thatthan as a health insurance company or even a healthcare company. Thefocus is on fostering true well-being, which can be translated into many they already love to do andaspects of an individual’s life – physical, mental, social and financial. trying to make those thingsOur ability to look for adjacencies will be defined largely by how the healthier. If you approach itconsumer perceives “well-being” in this broader sense. Philosophically,we’ve found that trying to influence behavior change is a tall order even from the other direction byif people are motivated. trying to induce new behaviorWe’ve seen the greatest results from engaging people in doing thethings that they already love to do - and trying to make those things that’s “good for you,” that’shealthier. If you approach it from the other direction by trying to inducenew behavior that’s “good for you,” it’s going to be a harder sell. I think going to be a harder sell.”that the health industry at large would probably benefit from adopting asimilar philosophy.How do you go about making daily life activities healthier foryour members?One approach is through health entertainment. For, example, wedeveloped a program called the Horsepower Challenge, which weoriginally piloted in local schools in Louisville, Kentucky.Now, Louisville, Kentucky is the home of the Kentucky Derby so youhave to understand that our love of horses goes pretty deep.About six weeks before the Kentucky Derby, we rolled out a gamechallenge to 100 middle school kids in five different schools. We gavethem all wireless pedometers, with no display on them, to wear aroundthe school and collect a baseline of their behavior. And then, a weeklater, we told them that they were in a competition with all the otherschools in the area (some of these were cross-town rivals), in a racearound the world.Each student was represented by a cartoon horse avatar and couldearn virtual currency by increasing their step count every day. Therewas a wireless router at the entrance of the school that read their stepsfrom their pedometers on a daily basis. As the students earned steps,they earned currency that they could use to buy accessories andaccoutrements for their horse avatars.The kids loved playing the game and it motivated them to come upwith all kinds of creative ways to earn more steps per day. Computerscience instructors were letting the kids walk in place at their computerterminals. Kids self organized in one case and went from second placeto first place by taking a shorter lunch break and doing laps around theschool track.During this pilot of only about four weeks, these 100 kids took enoughsteps to go from Louisville, Kentucky to Anchorage, Alaska and back Anticipate. Innovate. Activate.again. Even better, they went home and walked with their families as | Future Think LLC © 2005–10 Reproduction prohibited | New York NY
  6. 6. the innovator’s interview 6Tony Tomazicwell. We saw quantitative data that these kids actually increased theactivity of their larger family unit as well.We started from the idea that kids like playing games already, andthen created a game that was all about the kind of activity that wewanted them to undertake. It was a huge success, even as a pilot, andnow we sell Horsepower Challenge to organizations. It’s the type ofprogram that can be adapted readily, wherever you can find the naturalcompetition that comes from team relationships – whether it’s majorsports affiliations or local teams or businesses – and leverage it tomotivate behavior change.Humana has a reputation for leveraging open innovation practices.What’s your approach?We actively pursue and facilitate open discussion with likemindedinnovators. We focus on exploration for exploration’s sake withoutrequiring every discussion to be a commitment to a new strategy.Our website at serves as a platform forconnecting with other innovators. In fact, I want to invite all of yourreaders with similar philosophies for steering people towards greaterhealth and well-being, to join the conversation. We’re always interestedin talking to likeminded individuals and businesses. We can be reachedthrough, via e-mail at crumpleitup@gmail.comor through Twitter: @CrumpleItUp.We also just had our inaugural session of the Humana InnovationAdvisory Board. Our senior VP invited corporate leaders from disparateindustries to visit and collaborate with us on innovative thoughtleadership in the space of health and well-being.These approaches to open innovation are not new, but I think theyare really starting to take off. People are becoming more comfortablewith talking about their business openly – not airing their dirty laundryper se, but talking about their pain points. Doing that in a veryfrank environment with no expectations about results leads to somefascinating discussion.Along those lines, what do you suppose makes an individual goodat innovation?Ideally, I’d say a good innovator should be able to wear four hats equallywell: project manager, creative consultant, entrepreneur, and advertising/PR person. That creative spark has to come from somewhere, but youalso have to have the ability to drive an idea forward and see it through amarketing lens. Otherwise, you’ll never get traction.If you don’t have all four of those skill sets, you have to get a network ofpeople to back you up or hire or partner to get them from outside.To be good at innovation, you also have to understand that you can’tcling to the notion that your success as an innovator is going to relyon the success of one particular idea. Your success as an innovatoris going to depend on how well you execute your work, but ultimatelyit may not be that particular idea that succeeds. And you need to beprepared for that. Anticipate. Innovate. Activate. | Future Think LLC © 2005–10 Reproduction prohibited | New York NY
  7. 7. the innovator’s interview 7Tony TomazicWhat do you think is the single biggest challenge to makinginnovation happen?I don’t believe that innovation can easily emerge without an environment “A good innovator should beto support it. Look at startup companies: they make innovation part of able to wear four hats well:their identity. They must embrace that disruptive and creative potentialof innovation in order to be able to change the status quo. As a company Project Manager, Creativegets bigger, it’s harder to maintain that kind of environment. Consultant, Entrepreneur,Everybody wants to improve their bottom line, but it’s not lip service that’sgoing to get you there. You actually have to be willing embrace innovative and Advertising/PR person.”ideas when they emerge and that’s not always going to be comfortable.What do you think the role of an innovation team or innovation officeshould be?I believe that the key is to create a collaborative relationship betweenthe innovation team and the rest of the organization so that innovationbecomes infused in all business areas. Then you can leverageinnovation specialists and their expertise to help other departmentsbring great concepts to life. I think that’s probably the best successmodel you’re going to find in a large corporate environment.There is some danger in placing the responsibility for innovation in asingle department. That structure can lead to difficulty establishinga pipeline between innovation and the rest of the business. Businesssegment leaders have their own responsibility for strategy and budgetsand deliverables. Getting them to accept new things to manage withthe same resources – without a measure of ownership of those newinnovations from the beginning – is going to be a challenge.However, if you can make innovation team members available to thosebusiness owners to support them, and innovation support is that team’sresponsibility, then the things that you collaborate on together becomejointly owned.What would you say is the number one indicator of a healthyinnovation program?In a healthy innovation program, you see the best ideas move forwardat the expense of those ideas that objectively don’t stack up. When petprojects survive and bad ideas continue to get funding, there’s a problem.Healthy innovation requires people to see that their ideas are not theirchildren, even though it may feel like it sometimes. You must be willingto shelve hard work and change direction if success lies elsewhere.If the Humana CEO were to come to you tomorrow requesting aprogress report on innovation, what three metrics would you reporton and why?I’d give him an update on:1) The number of concepts that are currently in our prototyping pipeline;2) The value of our innovation products this year; and3) A picture of our current budget snapshot.I think that that would be enough for him to understand our progress Anticipate. Innovate. Activate.and whether or not things were on track. | Future Think LLC © 2005–10 Reproduction prohibited | New York NY
  8. 8. the innovator’s interview 8Tony TomazicI do think that those key innovation metrics change over time. I don’tbelieve that you can cling to the same metrics any more than you canlimit yourself to the same innovation practices over time.What are some ‘quick win’ suggestions you’d give to other innovatorswho are trying to get momentum around innovation?If I was starting a new program and trying to get some early tractionwithin an organization that hadn’t experienced innovative practicebefore, I would seek out a business owner with some pain points intheir responsibility area, get a cost figure associated with those painpoints, and then partner with the business owner to find solutions anddemonstrate how innovation can benefit the organization.What other advice would you offer to organizations trying to buildinnovation efforts, especially given our current economic environment?You have to keep your faith. You have to be a believer in what you’redoing if you’re going to ask anyone else to believe.You also have to make sure that you have the experience and the know-how to ask yourself the hard questions. If the idea stands up to yourown scrutiny, then you ought to be able to stand up for the idea. And ifyou can pick it apart, then it’s probably not strong enough to back up;you need to return to the drawing board.There will always be people willing to naysay or play the devil’s advocate– and there ought to be. There is value in being challenged. The challenges can make the idea better than it was. You must be able to shape it, craft it and sharpen it. But, if you don’t have someone who believes in the potential of what the idea could be, then it’s just not going to take off.Here’s the dilemma: You have to be practical and keep your eye onwhat your business actually is. At the same time, you can’t be toopractical. If you put the blinders on too tight, then you’re going to missopportunities to step outside the status quo. You’re never going to jumpthe curb if you stay in your own lane. Anticipate. Innovate. Activate. | Future Think LLC © 2005–10 Reproduction prohibited | New York NY
  9. 9. the innovator’s interview 9Tony Tomazic What can you learn from Tony Tomazic and Humana’s approach to innovation? • Adjacent Innovation: Do you look for innovation opportunities in markets adjacent to your core business space? How can you look beyond traditional business boundaries? • Open Innovation: Do you actively seek out discussion and collaboration with likeminded innovators? How can you open up your processes? • Embracing Change: Has your innovation program evolved to meet changing business needs? How can you become more nimble? • Changing Behavior: Could you drive results through influencing behavior? How can you motivate customers or employees to make a shift? To learn more about the research, tools and training you need to better innovate, visit us at Anticipate. Innovate. Activate. | Future Think LLC © 2005–10 Reproduction prohibited | New York NY